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GM to make profit in Europe, hit N American margin target in 2016

Thursday, October 2, 2014 - 12:14

[MILFORD] General Motors Co on Wednesday said that in 2016 it would ring up its first profits in Europe in more than a decade and hit targeted North American operating margins.

The news came two days after its smaller rival Ford Motor Co disappointed investors with its financial outlook.

GM had previously said it would hit those targets by mid-decade, but it offered the more specific timetable at its investor meeting at the automaker's test track outside Detroit.

The No 1 US automaker also said any cash returned to shareholders would be mostly through increased dividends. In March, it paid its first quarterly common-stock dividend in almost six years. Some analysts had speculated GM might offer a broad stock buyback program, tapping its $39 billion in cash and equivalents.

On Monday, Ford slashed its profit outlook for 2014, blaming higher recall costs in North America and steeper losses in Russia and South America. It also offered a disappointing 2015 profit forecast.

GM did not provide an update for its overall 2014 financial results. It said in June and affirmed in July that it was running on or ahead of pace for its previously disclosed plan to report modestly better 2014 operating earnings. Last year, GM's operating profit was US$8.6 billion.

Shares of GM were up 6 cents at US$32 in morning trading. The stock is down more than 20 per cent so far this year and trades below its fall 2010 initial public offering price of US$33.

GM's target for North American operating margin in 2016 is 10 per cent. Chief executive officer Mary Barra said the margin target for Europe took into account steps the company had taken to minimize the impact of the downturn in the Russian market. - Reuters